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Analysis

Tenet Posts Modest Gains in Q2, Conifer Revenues Dip 8%

By Jack O'Brien  
   August 05, 2019

The Dallas-based for-profit hospital operator is updating part of its year-end guidance after a decent Q2 showing.

Though Tenet Health Corp. saw its net income drop $9 million year-over-year, the company improved across several metrics and modified its financial outlook as a result, according to its latest earnings report released Monday afternoon.

The company's adjusted EBITDA of $657 million was on the higher side of the outlook range, while net operating revenues rose 2.5% to $3.82 billion in Q2.

Tenet's subsidiary Conifer Health Solutions, posted mixed results with an adjusted EBITDA of 13.2% but revenues that were 8% lower due to divestitures by Tenet and other customers.

Tenet announced in late July that it would spin off Conifer as a publicly-traded company in mid-2021.  

Related: Tenet to Spin Off Revenue Cycle Subsidiary Conifer Health Solutions

As for the company as a whole, admissions rose 3.3% on a same-hospital basis, as well as net revenue per adjusted admission at 3.4%. Hospital segment same-hospital net revenues grew by more than 5.5% and the ambulatory care segment same-facility system-wide surgical revenue topped 5%.

C-SUITE PERSPECTIVE:

"We delivered another strong quarter which included a very meaningful improvement in volume growth in our hospital portfolio, continued volume and earnings growth at USPI and strong financial results at Conifer," Ronald Rittenmeyer, CEO of Tenet, said in a statement. "We are continuing to take appropriate actions to improve our cost structure and our focus on improving volume growth is showing results."   

Both Tenet's diluted earnings per share (EPS) and adjusted EPS bounced in Q2, rising by $0.94 and $0.51, respectively.  

Tenet has again reiterated its outlook for revenue, adjusted EPS, adjusted EBITDA, and adjusted free cash flow. The company's updated year-end guidance features two slight contractions: net income in a range between $16 million to $116 million, and an EPS between $0.15 and $1.09. 

Related: Tenet Slashes Net Losses to $27M, But Revenues Slide 2.2%

Tenet's cash and cash equivalents dropped $3 million compared to Q1, which is a fraction of the $411 million slide from the end of 2018. On the other hand, net cash used in investing activities rose to $303 million, a nearly $80 million increase year-over-year.

ADDITIONAL TENET Q2 EARNINGS REPORT HIGHLIGHTS:

  • Total outpatient visits fell 3.2% year-over-year.
  • Net patient revenues slipped in managed care, but all other segments were either flat or showed growth in Q2. 
  • Total selected operating expenses grew by 3.5%.

For complete financial information, review Tenet's filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Milan, Italy - November 1, 2017: Tenet Healthcare logo on the website homepage. - Image / Photo credit: Casimiro PT / Shutterstock.com


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